Amendment 22

Amendment 23

Amendment 24

Amendment 24A

Amendment 26

Amendment 27

Amendments 29 and 30

Amendment 31

Amendment 33

Amendment 34

Amendment 35

Amendments 36 to 44

Amendments 45 to 58

Amendment 59

Baroness Fairhead: My Lords, I thank all of your Lordships who have contributed to this debate for the many insightful points raised and the informed speeches made. I join my noble friend Lady Neville-Rolfe in commending the noble Lord, Lord Purvis of Tweed, for raising what is, as the noble Viscount, Lord Waverley, agreed, a very important subject. It is critical that we transition these three trade agreements, which cover countries accounting for £3.5 billion of our trade.
The noble Lord, Lord Purvis, has raised a concern with the scrutiny processes with respect to these continuity agreements. Let me reiterate what has already been done on scrutiny to date. For the sake of clarity, these are existing EU trade agreements that we are transitioning to bilateral agreements between the UK and third countries. Therefore, they have already been subject to a scrutiny process at EU level, and this was overseen in our Parliament by our EU Select Committees. Ratifying these agreements means that we can provide assurance to business in the UK and third countries that there will be trade continuity in any EU exit scenario.
However, we hear the noble Lord’s concerns  that Parliament should have appropriate opportunities for scrutiny, and it is absolutely an objective of  the Government that Parliament is afforded these opportunities. That is why the Government agreed to go over and above the requirements as laid out in the Constitutional Reform and Governance Act by setting out in a report to Parliament details of any significant trade-related differences between the UK and EU free trade agreements, and explanations for the changes. These reports must be published 10 days before implementing regulations are laid under the Trade Bill or before ratification, whichever is earlier. Indeed, I will shortly take the House through a precis of the three agreements and the reports that were laid alongside the texts. I hope this will demonstrate the detail that they include to those who have not had the opportunity to go through them, and will reassure the House about our approach to transparency.
I start with the UK-Chile agreement, which reproduces the effects of the EU-Chile agreement as closely as possible, making only technical changes to ensure that the agreement can continue to operate between the UK and Chile. It means that our businesses can, for example, continue to sell cars to Chile on existing terms. In fact, according to HMRC data estimates, 2,400 VAT-registered businesses in the UK exported to Chile in 2017 alone. Trade in goods and services between the UK and Chile was £1.8 billion in 2017—the top goods imported from Chile being edible fruit and  nuts, beverages, spirits and vinegar, while our key exports to Chile were machinery and mechanical appliances.
In transitioning the agreement, the tariff-rate quotas in the UK-Chile agreement have been resized from the original EU-Chile ones to reflect that the UK is a smaller import and export market than the EU 28. These quotas were agreed following examination of a range of evidence including historical usage data and trade flow data.
I turn now to rules of origin. When the UK leaves the EU, the designation of UK exports will shift from EU-originating to UK-originating. To ensure maximum continuity for business, the UK-Chile agreement provides that EU materials can continue to be recognised in UK and Chilean exports to one another. Furthermore, EU processing can be recognised in UK exports to Chile.
The noble Lord, Lord Purvis, raised an important issue on where the new agreement differs from the original, and that is with regard to parliamentary committees. The original EU-Chile agreement established an association parliamentary committee as a forum for members of the European Parliament and the Chilean National Congress to meet and exchange views. The EU-Chile committee may, for example, make recommendations to the EU-Chile Association Council. Given the principle of continuity, it has been our intention to replicate the institutional structures of the original EU-Chile agreement where possible. With respect to the association parliamentary committee, we did not consider it appropriate to bind Parliament to this commitment without prior consultation. We have therefore agreed treaty text which reserves the right of UK parliamentarians to their position until such consultations have been concluded. The association council provides a mechanism that allows for the establishment of the association parliamentary committee at the request of the parties. If Parliament considers that it wants this committee to be set up, then DIT officials will work with Chilean counterparts to seek to establish this committee at the earliest possible opportunity.
Turning to the economic partnership agreement between eastern and southern Africa countries and the UK, this maintains the effects of the ESA-EU EPA in a bilateral context. As the noble Lord, Lord Purvis, reiterated, EPAs are asymmetric in favour of developing countries and are therefore critically important to their progress. The UK signed the agreement on 31 January with Mauritius, Seychelles and Zimbabwe, and we expect Madagascar and Comoros to sign in the near future.
The agreement ensures that there will be no disruption to our trading relationship with eastern and southern Africa as we leave the leave the EU and will help to support jobs and economic development in ESA countries. It will allow continued tariff-free imports from eastern and southern Africa, and will remove the majority of tariffs on British goods to these countries, such as machinery exports, over the coming years. Consumers in the UK will clearly continue to benefit from more choice and lower prices for products such as clothes  and tuna from Mauritius. I want to be clear that as there are no TRQs in the ESA-EU EPA, there are none in the ESA-UK EPA. The only significant change in the ESA rules-of-origin provisions is to allow EU accumulation and the resizing of the derogation quotas for canned tuna and tuna loins. The derogations themselves already existed under the EU EPA, but the quota has been resized to reflect the size of the UK compared to the EU.
The UK-Faroe Islands free trade agreement replicates the original EU-Faroe Islands FTA bilaterally. My noble friend Lady McIntosh raised a concern in our previous debate on this in the House that this agreement would increase duties. I discussed this with her, but she asked me to confirm in front of the House that this agreement would not increase duties. In fact, the £11 million figure in the Government’s parliamentary report on this agreement is an estimate of what the tariff impacts would have been if the EU-Faroe Islands FTAs were not transitioned to this bilateral agreement and instead reverted to the WTO MFN tariff rate.
As with the original EU trade agreement, our FTA covers only trade in goods, with the most important product being fish imported from the Faroe Islands to the UK. The agreement continues in line with government policy provisions on preferential tariffs and quotas, rules of origin and some customs and energy-related provisions. To ensure continuity of effect, TRQs have been resized to reflect the size of the UK compared to the EU. As with the Chile and ESA agreements, we are continuing current arrangements for the accumulation of EU content in goods traded between the UK and the Faroe Islands.
The noble Lord, Lord Purvis, said that the economic value of this agreement was relatively low, although he was not seeking to belittle it. I agree that one should not belittle it, because, although it is relatively small, it has significant sectoral importance. I disagree that this is principally of concern to the Faroe Islands, because this trade is very important for the UK’s fish processing industry, which is concentrated in particular areas such as Humberside and the Grampian region of Scotland. Through this agreement, UK consumers will continue to benefit from greater choice and lower prices for fish and seafood, such as Atlantic salmon, haddock and halibut. This agreement will allow imports to continue with zero tariffs, and will ensure that fresh, high-quality, affordable produce is readily available to our retailers and consumers.
The UK-Faroe Islands FTA is a continuity agreement in every sense of the word. Apart from very few modifications, for example to the veterinary protocol, the FTA effectively rolls over the EU-Faroe Islands agreement in its entirety. I know that the FTA is of interest to my Scottish colleagues in particular, because of the connection between the Scottish regions and the fisheries industry. It is important to take time in this debate—this was raised by the noble Lord, Lord Purvis—to set out the distinction between the trading arrangements and the fisheries arrangements with the Faroe Islands.
The EU-Faroe Islands fisheries agreement is concerned with access to waters, and the volume of what can be fished in specific waters. The current EU-Faroes FTA  text makes reference to the separate EU-Faroes fisheries deal. In the event that the UK leaves the EU without a deal, we would no longer be party to that agreement. It would therefore not be appropriate to make a reference to it in our bilateral FTA, and we have removed that reference. My colleagues at the Department for Environment, Food and Rural Affairs are in ongoing discussions with the Faroe Islands about a UK-Faroe Islands fisheries agreement for a no-deal scenario. This would provide continuity for the remainder of 2019 in the event of no deal.
Having shared this detail in the reports on the three continuity agreements, I will provide the House with further reassurance that they will have appropriate scrutiny. Any instances where the Trade Bill power  is used to make necessary amendments to domestic legislation as a result of transitioning these agreements will require a debate and a vote in both Houses. These requirements under the Trade Bill are in addition to the scrutiny required by the CRaG, which was passed by this House. Twenty-one sitting days in both Houses is the length provided for by that Act. In practice, the existence of parliamentary recess and non-sitting days does mean, as the House will be aware, that Parliament has had five calendar weeks to scrutinise these treaties, and in that time the House of Lords EU Committee has provided a report on the agreements.
I thank the committee, its officials and—as my noble friend Lady Neville-Rolfe said—its clerks and advisers, for this report and the extraordinary work that is done on a cross-party effort. It is genuinely helpful. It considered the Scrutiny of International Agreements; Treaties Considered on 26 February report. It was a robust report that drew special attention to these agreements, which the noble Lord, Lord Purvis, and my noble friend Lady Verma raised in their remarks. I will touch on them briefly, but I can assure noble Lords that I will be sending a letter to the chairman of the committee, the noble Lord, Lord Boswell, this week, and I will place a copy in the Libraries of both Houses.
One of the points was on the progress of the trade continuity agreements. This House has discussed the progress report that we have laid in a WMS. We have confirmed that alongside every agreement signed we will table a detailed report, such as the ones before the House. Particular concerns were raised about the short-form report—I understand that the committee believed it was a pragmatic way to expedite the process. On laying the original text, what the department has done instead, which it believes is more helpful, is create a link to the now-existing agreement, which is online, and all of the links will be shown in the letter. I hope that that will be even better than the original text.
On consultation with devolved Administrations, I hear the point from my noble friend Lady Verma clearly, and I have said on the Floor of the House that we have learned lessons and we will be sharing the initial texts with the devolved Administrations. The Government believe that the length of time—21 days—is appropriate for the scrutiny of pre-existing agreements that have been transitioned, and do not intend to extend it. My noble friend Lady Verma talked about future FTAs, and I would hope that the Command  Paper addresses a number of the issues around future FTAs. While Brexit has increased the rate at which we are signing international agreements, the underlying issues regarding scrutiny have not fundamentally changed. The CRaG period of scrutiny was a long-held parliamentary principle even before it was put into legislation. While these three continuity agreements are vital, their effect is to maintain the trading relationships that our businesses and theirs already enjoy.
I confirm that where EU agreements with these countries provide protection for human rights, our agreement continues to provide such protection. The noble Lord, Lord Purvis, refer to the Cotonou agreement. The UK has replicated in the EPA the effects of the reference to that agreement in annexe five. I hope that provides reassurance. The changes in the agreements are limited to those necessary to maintain the effects as far as possible in a UK context.
The noble Lord, Lord Purvis, also asked about Zambia and the Comoros. In line with the Government’s commitment under the Trade Bill, the explanatory material gives details of and explains the reasons for any significant differences. This EPA is open to other eastern and southern African countries to join, including Zambia. There has been no change in their status or the accession process in the ESA-UK EPA. That is why we have not specifically mentioned these countries in the explanatory material. There was no intention to hide anything on this front. We would welcome widening coverage of these agreements if partners wished to join us.
The noble Lord also mentioned Crown dependencies and British Overseas Territories. The territorial application article sets out to which territories this agreement applies and how it applies to them. In the original agreement the territorial application article defined the EU’s territorial coverage by referencing the EU treaties. In the new agreement this has been replaced by an article which ensures that the agreement applies to the UK and the territories engaged in trade for whose international relations it is responsible, in the same way as the previous agreement. As the House will be aware, there are three categories of territories to which this agreement may apply, based on the application of the EU treaties under EU law to date: the Crown dependencies; Gibraltar, to which, broadly, provisions not relating to goods or customs apply; and the other overseas territories aside from sovereign base areas.
My noble friends Lady Neville-Rolfe and Lady Verma alluded to the fact that Switzerland has just been reported on by the committee today. I cannot pretend that I have read its report—I have mainly been on the Floor of this Chamber since that happened—but regarding the challenge and services, my understanding is that services currently are not part of a free trade agreement or trade agreement with Switzerland. Therefore, as this is about continuity, that is why we see limited reference to services. I again confirm that we see services as critically important, since 80% of our economy is services. We will seek to support them in other ways.
The noble Lord, Lord Stevenson of Balmacara, referred to the investment clause. I am happy to write to him if that would be helpful.
The Government’s existing approach allows for and provides the opportunity for scrutiny of these agreements. It is evidenced by the reports published by the House of Lords European Union Committee, and by the support that I hope officials from my department extended to that committee in its deliberations—I understand that they did—both in the form of the parliamentary report and in responding to queries before the report was published. I hope that the noble Lord, Lord Purvis, agrees that it is also evidenced by identifying parliamentary time to debate these Motions.
Given the level of scrutiny that these agreements have been subject to, we do not feel that there would be major benefit in extending the current sitting period by 21 more days, but we believe that there would be a cost.
Not having these agreements in place would mean uncertainty for our trading partners, our businesses and our consumers. It would create a cliff edge for these agreements simply to facilitate more time for scrutiny, which we do not believe is a desirable outcome for anyone. On that basis, I thank the noble Lord again for this rich debate, but urge him to support the Government’s policy to offer certainty to all by transitioning these important arrangements in good time. I therefore ask the noble Lord to withdraw his Motion.
Lord Purvis of Tweed: I am most grateful to the Minister for her very thorough response to all the points that have been raised not just by me but by colleagues—the noble Baronesses, Lady Verma and Lady Neville-Rolfe, from the committee, the noble Viscount, Lord Waverley, and the noble Lord, Lord Stevenson.
The noble Baroness, Lady Neville-Rolfe, suggested that I may have a little bit of chutzpah in bringing these Motions to the House this evening. I plead guilty, and do not demur from that at all. But, in doing so, I hope that it was a vehicle through which the noble Baroness, Lady Verma, was able to present the hard work that her committee members and staff have done. If nothing else, it demonstrated part of the work of the committees of this House and the value that they bring to other non-committee members on some aspects, as said by the noble Lord, Lord Stevenson.
Sometimes these documents are almost impenetrable without the expert support and advice we need since we cannot get the support that Ministers have from the Bill teams. It has been very welcome, and no doubt we will be able to say this on Third Reading of the Trade Bill, that throughout the proceedings the Minister, the noble Lord, Lord Bates, and the noble Viscount, Lord Younger, have been very engaged with me. It has been most beneficial. But when an individual Member comes in to meet the three Ministers and five officials from the department, that is slightly daunting—I am sure it is not deliberately so. Nevertheless, as the noble Lord, Lord Stevenson, said, these treaties we will be engaged in are often complex and wide-ranging. The reality, as colleagues have said, is that this will now be a major part of our work in engaging in the scrutiny and ratification process of trade agreements, and then in the continuous updating of them all.
I have two final points in welcoming the Minister’s response. First, the noble Viscount, Lord Waverley, made a point that struck me. If the Government see Parliament as a resource rather than as something to be afraid of, the process is much more beneficial. I know the Minister believes this, and that is very welcome, but we are having to find new ways of dealing with  a new set of environments. Secondly, if we are  moving and migrating some of the elements, including parliamentary activities, I am sure that there will be a call for some form of additional resource for Parliament to enable us to carry out our functions in some of the committees.
As the noble Lord, Lord Stevenson, said, if we are embarking on a new way forward, I will put on record—it is helpful that the Government Chief Whip is here—how helpful the Government Whips Office was in scheduling this debate straight after the Trade Bill. It has been a long day, but it meant that those who have been engaged in this issue have had an opportunity to air some of those aspects.
I look forward to the Minister’s letter; I am sure that the Committee does as well. We have simply whetted our appetite for the Swiss agreement and the other forthcoming ones. On the basis of the Minister’s very helpful response, I beg leave to withdraw the Motion in my name.
Motion withdrawn.